Big Vehicle Excise Duty (VED) changes are afoot and all UK vehicle owners will soon see alterations to their road tax costs. The idea is to promote environmental sustainability and tighten tax contributions between the vehicle’s value and its emissions. 

VED Road Tax Changes UK

Understanding the New VED Road Tax Changes in the UK

Starting April 1, 2025, the following rates will apply: 

Electric Vehicles (EVs):

First-Year Tax: New zero-emission vehicles will incur a first-year VED fee of £10, aligning with the current rate until 2029/30.

Standard Annual Tax: From the second year onwards, EVs will be taxed at the standard rate of £195 annually. This rate is set to increase in line with the Retail Price Index (RPI) in future years.

Expensive Car Supplement (ECS): EVs with a list price over £40,000 will now be subject to an additional £410 per year from the second year of registration, continuing for five years.

Low Emission Vehicles (1-50g/km CO₂):

First-Year Tax: The first-year VED for cars emitting 1-50 g/km of CO2, including hybrid vehicles, will increase to £110 from £10. Rates for cars emitting 51-75 g/km will go up to £130.

Higher Emission Vehicles (76g/km CO₂ and above):

First-Year Tax: Vehicles emitting between 151-170g/km CO₂ will see their first-year VED rise from £680 to £1,360 (a 100% increase). This pattern of doubling the first-year tax applies to all bands above 75g/km.

Essentially, older vehicles with higher emission output will suffer the consequences as we push towards a greener vehicle future. Electric vehicles look like the most appealing option, at this moment in time, but modern vehicles are designed to have low emission outputs, so new cars and vans are still a good option. 

Why Leasing a New Vehicle Now Makes Sense

With these impending tax increases, leasing a new vehicle offers several advantages:

  • Fixed Monthly Payments: Leasing agreements typically include VED in the monthly payment, allowing you to manage costs effectively without unexpected tax hikes.
  • Access to Newer, More Efficient Vehicles: Leasing enables you to drive the latest models, which often feature improved fuel efficiency and lower emissions, potentially reducing your overall tax liability.
  • Regular Upgrades: Leasing allows you to upgrade to newer models every few years, ensuring you benefit from the latest technology and safety features.

Summit Summary

The upcoming VED changes give you reason to consider leasing a new vehicle. By doing so, you can manage costs effectively, enjoy the benefits of newer, more efficient vehicles, and avoid the financial impact of increased road tax rates.

Check the vehcile description and specification to identify the emission output and you should be able to calcualte what you will pay.